Many of us are looking for productive ways to make use of our time at home during this COVID-19 pandemic. By now you may be far enough down your “to-do” list to consider items you’ve been procrastinating on – like updating your estate plan. Whether you envision your estate plan to be simple or complex, now is as good a time as any to check this item off you “to-do” list.
To ease into this, the first of this series starts at the heart and anchor of many estate plans: your Will.
- Choosing an Executor: Many would agree that an estate plan is only as good as the person administering it. The time and stress of acting as an executor is frequently underestimated. It is therefore critical that you select someone reliable, trustworthy and up for the challenge. Since circumstances change over the years, it’s important to review your executor appointment and to confirm that the appointee is still up for the job. If your children are now adults, consider making the simple update of appointing your adult child as an executor or alternate executor – contingency plans like the appointment of an alternate executor go a long way. Executor updates should also be considered following events such as: the end of your relationship with an appointee, the death or incapacity of an appointee, an appointee ceasing to be resident in Canada, or if an appointee is a corporate trustee considering whether you now have an individual you could appoint in their place.
- Choosing a Guardian: For those with minor children, the same factors should be applied in selecting or updating the guardian of your children.
- Trusts created for Children: Having children is a common trigger for creating a Will. Invariably, these Wills leave everything to a surviving spouse and on the death of a surviving spouse, trusts are created for children until they reach a certain age. As the years pass, your portfolio of assets will have developed and so your children will have to. Consider reviewing the terms of the trusts for your children and either adjusting ages at which set distributions can be made or if your children have grown to the point of being appointed as an executor of your Will, consider whether your children are ready for outright distributions rather than a trust. After 2016, trusts created under Wills are no longer treated as favourably from a tax perspective so this might also be a reason for outright distributions. Trusts terms may also need to be modified for families that include a beneficiary with a disability that was not previously diagnosed or accounted for.
- Loans or Inheritance Advances to Children: It is common for parents to have loaned funds to their adult children or to have provided their children with “advances” on their inheritance. This is particularly common in British Columbia with the surge of parents in recent years helping their children get into the rising residential housing market. Where parents have given their children differing amounts of money – whether as a loan or an inheritance advance – a Will may need to included provisions to forgive such loans or take these amounts into account to ensure that each child ultimately inherits equally.
- Private Company Shares: Owners of private companies should consider whether the value of their shares warrants the use of “multiple wills”, a strategy confirmed by B.C. courts in recent years to reduce probate fees that would otherwise be payable on such shares. Since private company shares can generally be transferred on death without a probate grant, multiple wills are commonly used to keep shares out of the probate process. Based on probate fees currently assessed at 1.4%, the opportunity to save $14,000 in probate fees on every $1,000,000 in value is worthwhile for many. Multiple wills are also used to maintain confidentiality for shareholders who do not want their shareholdings (and their value) publicly disclosed in probate document. Multiple wills can be particularly helpful for shareholders who have recently completed an “estate freeze” but are not yet 65 and eligible to transfer those shares into an alter ego or joint partner trust to minimize probate fees
Revisiting your Will is also an opportune time to consider preparing accompanying documents like a “letter of wishes”, a non-legally binding document that commonly acts as a sidecar document to your Will. Letters of wishes commonly include details on aspects such as: the division of personal items, guidance on the use of trust funds for children or grandchildren, and funeral wishes. Letters of wishes can be invaluable in guiding your executor on details that are not typically set out in a Will. Our estate planning package includes samples for our clients to consider.
Signing a Will during COVID-19
British Columbia’s Wills, Estates and Succession Act (“WESA”) contains strict signing and witnessing requirements for Wills. Stemming from the COVID-19 pandemic, we are offering our clients with a range of signing options beyond the traditional in-person meeting. Through the use of options such as video conferencing and the creation of interim Will-like testamentary documents recognized under WESA, we are equipped to advise on the option that best suits your circumstances.